Public Service Alliance of Canada BC

source: Ottawa Citizen, November 19, 2008

OTTAWA – The Harper government intends to use legislation to control the federal payroll after slapping workers in the core public service with a take-it-or-leave-it deal worth 6.8 per cent over four years.

The government said in its throne speech on Wednesday that it will table legislation to ensure “sustainable compensation growth in the federal public service,” which includes departments, agencies and Crown corporations.

The news of possible wage controls comes a day after Treasury Board President Vic Toews notified each of the 20 unions still negotiating contracts that wage talks are over and the government’s final offer was a four-year deal that limited raises to 2.3% in the first year, 1.5% in year two, 1.5% in year three and 1.5% in year four. He said “discussions” could continue, but money was off limits.

Talks have dragged on for months with little progress. Most say the unions were privately hoping to settle with yearly raises between two per cent and 2.5 per cent.

The speech’s cap on compensation was a big signal to federal bureaucrats that the good times of the past decade, when the public service was expanding, are coming to an end. The core public service has ballooned back to the size it was before the Liberals’ massive downsizing of the 1990s when 50,000 jobs were wiped off the payroll. A limit on compensation will not only control wage and pension costs, but it will also have a downward impact on wage settlements across the country.

The government spends about $25 billion per year on compensation, accounting for more than one-third of the government’s discretionary spending.

The belt-tightening doesn’t end there, though. The speech said “hard decisions” must be made about spending and all programs, grants, contributions and capital spending would be put under the “microscope of responsible spending.” It said departments will have funding for the essential services, but “no more,” raising questions among bureaucrats whether everything from travel to hospitality to training would be on the chopping block.

It called for major reforms to procurement, especially military, but also the way the government buys about $12 billion a year in goods and services. It promised to “streamline” the way it did business and suggested outsourcing or teaming up with private sector partnerships for “administration of programs and services.”

The government has been working on a multibillion-dollar “shared services” plan for several years to consolidate the internal corporate services that all departments use, such as information technology, human resources, procurement and finance. Until now, the projects were to be handled in-house, but some argue these services could easily be turned over to the private sector to run for fees.

Mr. Toews’ final wage offer took unions by surprise, leaving them scrambling to decide on a course of action. The offer was also sent to media and posted on the Treasury Board website.

The two largest unions, the Public Service Alliance of Canada (PSAC) and Professional Institute of the Public Service of Canada (PIPSC) called emergency meetings of their bargaining teams and boards of directors. Together, they represent more than 155,000 public servants.

“Why take such a thuggish, heavy-handed approach?” NDP Treasury Board critic Pat Martin asked. “I think cooler heads should prevail because, when we’re in such turbulent economic times, the last thing we need is to pick a fight with the whole public service.”

PIPSC president Michèle Demers said she was shocked the government would resort to such tactics and it was the “tip of the iceberg” of what’s to come for the public service.

“We’re not accepting this final offer and not accepting it as negotiations. … This is bad faith bargaining. We have been at the table for 18 months and some for more than two years. … We’re not going to roll over,” she said. “We’re seeing the tip of the iceberg. The Conservatives have never made any secret of their desire to privatize and deregulate. We’re in an economic slowdown, we need a strong and robust public service, not dwindled and dismantled.”

The unions have few choices. They can call a vote of their memberships on the final offer and recommend they accept or reject it or simply leave it to workers to decide. The Treasury Board, however, has the power to force a vote on the offer.

If the unions don’t accept the offer, they face the possibility of legislation. That means they could lose concessions on other issues already negotiated, but they also risk the government withdrawing the 6.8-per-cent offer and giving a lower settlement.

The unions were braced for the Harper government to shrink the size of the public service when it came to power, but it didn’t touch jobs and continued hiring. However, many bureaucrats had predicted in recent weeks that the government would use the economic crisis as the cover to exact some of the cuts it couldn’t pull off as a minority government.

Also, reining in federal wages and spending at a time of such uncertainty has no political downside. Most Canadians feel the public service, with its indexed pensions, should feel the pinch, too.

Compensation has been a simmering issue since the Liberal government of Paul Martin ordered a major study to get a handle on its cost.

That report, quietly tabled in July 2007, showed that, after a decade of unprecedented and painful cuts, the federal bureaucracy had ballooned close to its former size, increasing its overall cost to Canadians by 50 per cent.

It found that federal public servants were earning a “slight premium” over their private-sector counterparts, especially those working in low-level jobs or outside major cities. Those at the senior levels were behind their private-sector counterparts.

As well, the costs of about every piece of the compensation package, from pensions and salaries to health plans, had increased, except for overtime. That finding surprised many because of the mounting workloads left following the massive job cuts of the 1990s.